It has been speculated that MGM Resorts International, Entain Plc’s partner in the BetMGM joint sports betting operation, is preparing a second takeover offer. If the US casino behemoth buys out Entain in its entirety, it will control 100% of BetMGM.
If MGM is serious about making a second bid for Entain, they will need to give more than their initial $11.06 billion proposal from January. After Entain rejected the offer, MGM made it clear it had no intention of increasing its bid. For the next six months, per UK law, MGM was barred from making any other takeover bids. On July 19, those six months came to a close. At today’s currency rate, MGM’s initial offer would have been the same as a share price of $19.03. Entain’s share price, meanwhile, has risen since January and ended the second week of July at $25.05.
There has been no formal word from MGM about a potential second offer. BetMGM’s income results for this year and the growth of the US online casino market suggest otherwise, but they may be open to a second offer. The first quarter of 2021 was claimed to have brought in $163 million for BetMGM, a significant rise of 430% over the first quarter of 2020. The company anticipates generating $1 billion in net revenue in 2022 as a result of its operations.
MGM’s Original Entertainment Offer
When Entain’s sports betting partner, MGM Resorts International, made a $11 billion buyout bid in January, the London-listed gambling company said no. The offer specified that the majority of the purchase price would be paid in MGM stock, giving Entain a 41.5% stake in the combined company. A ‘limited partial cash option’ was also reportedly made available by MGM.
After the offer was turned down, Entain issued a statement saying, “Entain has informed MGMRI that it believes that the proposal significantly undervalues the Company and its prospects.” The board has also requested more information from MGMRI regarding the strategic rationale for merging the two organizations.
Partnership between MGM and Entain
One interesting question that will arise if MGM and Entain reach an agreement this time is how MGM will handle Entain’s global exposure. Throughout much of Europe and Australia, as well as some regions of Latin America, sports betting operations are powered by the superior technology developed by the English company. Given MGM’s history of favoring leaner business models, the company may look to divest itself of non-US brands like Ladbrokes, Coral, and Bwin in the event of a successful sale.
In April, MGM and Entain held an investor day for their partnership, BetMGM. BetMGM’s iGaming and sports betting businesses in the US were the focus of this online conference. Adam Greenblatt, CEO of BetMGM, and Gary Deutsch, CFO of BetMGM, both gave presentations. (PRNewswire, 2021)
A few months ago, when discussing BetMGM’s future and MGM’s collaboration with Entain, Greenblatt said, “The US market is shaping up to be even larger and more exciting than we originally envisaged, and we now believe it will be worth $32 billion, including Canada gambling revenue.” The team’s stellar performance thus far has also led us to project a 20-25% share of the US market as a realistic long-term goal. We have the best chance of success in this market because of the unique alliance between MGM Resorts’ dominant brand and dedicated customer base and Entain’s patented technological platform. (PRNewswire, 2021)
Pittsburgh Pirates Form a Partnership with BetMGM
BetMGM has also recently formed a sports betting deal with the Pittsburgh Pirates, resulting in the sportsbook’s logo being shown at PNC Park. Promotions and digital content geared for fans will be distributed via the baseball team’s social media channels as part of the collaboration.
When asked about the collaboration, Chief Revenue Officer Matt Prevost commented, “BetMGM has seen tremendous success in Pennsylvania since launching in December 2020.” With the Pirates’ help, BetMGM plans to expand its presence throughout the state. The company is especially excited to offer special discounts and perks to Pittsburgh’s die-hard baseball fans. (Finance.Yahoo.com, 2021).
BetMGM is a leading iGaming operator, and this new partnership is just the latest indication of the company’s meteoric ascent. The brand’s rapid growth will undoubtedly be a major factor in any future agreement between the brand’s current co-owners.